Jacobson’s liquidating after 134 years

August 9, 2002byGlen Beres

The retail world has lost yet another piece of its history with the recent liquidation of Jacobson Stores.

After 134 years in business, the upscale Jackson, Mich.-based department store retailer will soon be closing its doors for the last time. Jacobson’s began conducting going-out-of-business sales at all of its 18 locations in late July. The going-out-of-business sales include storewide discounts off the lowest ticket prices in all merchandise categories. The retailer said the sales would continue until all merchandise has been sold.

Jacobson’s decided to fold its operations after months of unsuccessfully trying to sell the company as a going concern.

The specialty retail chain, which filed for Chapter 11 bankruptcy protection in January, had struggled with falling sales and mounting losses in recent years. In its most recent fiscal year ended Feb. 2, Jacobson’s saw net sales plummet by 12.7% to $401.8 million. Comparable store sales decreased by 11.8%. The company sustained a net loss of $60.1 million, or $9.89 per share, in fiscal 2001.

Known for its upscale fashions and personal customer service, Jacobson’s had trouble competing against larger, lower-priced competitors in the sluggish economy. Analysts and other observers also say the company’s decision a few years ago to go from a regionalized to a centralized buying structure hastened its demise. The move cost the company the competitive regional edge it had built up over many years of observing buying trends in the individual markets it served.

Although Jacobson’s had stores in five states (Florida, Indiana, Kansas, Kentucky and Michigan), Michigan and Florida were its core markets. The retailer specialized in apparel, home furnishings, giftware and fine jewelry.

It was only a few years ago that Jacobson’s had as many as 26 stores and was talking about expansion. However, the company’s financial difficulties forced it into restructuring mode, and it eventually whittled itself down to 18 stores.

In addition to approving the liquidation process, the U.S. Bankruptcy Court for the Eastern District of Michigan, Southern Division, also approved separate bids to purchase the retailer’s merchandise and to purchase its accounts receivable.

A joint venture group including Gordon Brothers Retail Partners, SB Capital Group, Tiger Capital Group and Buxbaum & Associates are managing the going-out-of-business sales. Jacobson’s is liquidating more than $100 million of merchandise inventory.

“This is a great opportunity for Jacobson’s customers to find the distinctive merchandise assortments and fine gifts that they have come to expect at Jacobson’s at significant discounts,” said Gary Kulp of Boston-based Gordon Brothers Group, in a statement. “Since many of the most popular designer brand-name products will be featured in the sales, we know the stores will sell out very quickly.”

Jacobson’s failure will undoubtedly leave a large hole in the core Michigan and Florida markets it served for decades. But the company’s demise may also present opportunities for its competitors in terms of both additional market share and expansion. Unlike most retailers, Jacobson’s owns rather than leases most of its locations, and analysts expect the company to sell at least some of those locations as part of the liquidation process.